President Donald Trump’s trade war with Canada and Mexico was always going to test his tolerance for political risk.
Two days in, his decision to announce a carve-out for automakers has left industries, market analysts and consumers confused and flustered as they try to figure out where he is going next.
Following swift market backlash, Trump on Wednesday announced a one-month reprieve for autos and auto parts from the sweeping 25 percent tariffs he levied one day earlier. In doing so, he signaled an openness to hearing appeals from other industries for additional exemptions to the Mexico and Canada tariffs. It’s a stark contrast to the approach he is taking with the American people, whom he is asking to shoulder the risk of higher prices as a result of the tariffs, in exchange for the promise of longer-term economic benefit.
“I don’t know what the administration’s plan is,” said Sen. Rand Paul (R-Ky.). “If they’re using [tariffs] as leverage, seems to me it would be better to threaten them, negotiate and you put them on or not on.”
Together, the conflicting actions reflect the president’s dual impulses: longstanding sensitivity to stock market fluctuations — which he has long read as Nielsen ratings for his performance — and a love of tariffs as a primary instrument to get what he wants from foreign governments.
That tension is also reflected within Trump’s circle of advisers, who spent much of Wednesday debating whether and how far to mitigate the impacts of a trade war on American industries and consumers.
“It’s the greatest show on Earth. We’ll put tariffs on tonight, but tomorrow we’ll tell you we may negotiate and take them off,” a person close to the administration, granted anonymity to discuss internal conversations, told POLITICO. “But stay tuned, because you never know what tomorrow’s gonna bring.”
The self-inflicted economic uncertainty comes as Americans remain concerned about high prices, with polling showing that people don’t think the administration is doing enough to address the economy even as they are pleased with its performance on other issues. It also comes amid growing frustration on Capitol Hill, particularly among Republican senators from farm states, who fear the ripple effects from the tariffs on their local economies.
And it’s adding to confusion about whether the new tariffs on Canada and Mexico are truly aimed only at stemming the tide of fentanyl flowing across the U.S. border — a message Trump’s lieutenants have underscored far more firmly than the president himself — or reflective of the administration’s broader protectionist goals. The new tariffs, after all, are only a prelude to the more sweeping reciprocal tariffs the president has promised will take effect April 2 — and it’s unclear even to many of the president’s close allies what actions Canada and Mexico could take at this point to lift the tariffs entirely.
“The problem with using them as a negotiation also is that they negotiated: Mexico gave them something, and then they still put them on,” Paul added. “It doesn’t look like an honest negotiation.”
White House press secretary Karoline Leavitt, during a Wednesday afternoon briefing, pointed again to fentanyl seizures at the northern border during the last fiscal year as justification for the tariffs on Canada, but did not specify what future actions the president would like to see the country’s northern neighbors take. Even though Canadian Prime Minister Justin Trudeau has argued that fewer than 1 percent of illegal crossings and fentanyl seizures were at the Canadian border, the country is still moving forward with a plan to invest $1.3 billion in border security.
At the same time, Trump has done little since taking office to assuage Americans’ concerns about high prices. During his Tuesday night address to a joint session of Congress, he pointed to billions of dollars in corporate investments, lowering energy costs and cuts to government spending as his primary strategy to lower inflation — one that threatens to be undone by his tariffs.
In a rare call for sacrifice, the normally salesman-like president conceded the tariffs would cause “a little disturbance” to prices, while promising long-term economic gain.
“Last night the president told the truth, and he was realistic, and he level set with the American people,” Leavitt said. “It is very refreshing, and everyone in this room should be very grateful that we have a president who tells the truth about the reality of the economic situation that we are in.”
Stock markets rallied Wednesday both in anticipation of and following the announcement of the president’s softened stance on the Canada and Mexico tariffs. At the same time, trade experts acknowledged the administration’s moves are only a temporary reprieve and pointed to the ongoing confusion and chaos it has sowed through its many and conflicting announcements on trade over the last 40-plus days.
“Obviously a pause is welcome, but this constant ‘on again-off again’ of tariffs is difficult for companies that are trying to make sourcing and pricing decisions in real time,” said Tiffany Smith, vice president for global trade policy at the National Foreign Trade Council, a pro-free trade group.
Kyle Johnson, director of trade policy for the Information Technology Industry Council, which represents the global tech sector, including Google, Microsoft, Meta, Amazon and Apple, as well as major chipmakers like Intel and Taiwan’s TSMC, said the uncertain economic environment threatens to put the U.S. behind global competitors.
“Businesses rely on stability and certainty in order to innovate and compete,” Johnson said.
That uncertainty was on full display Wednesday as two of Trump’s top lieutenants — Commerce Secretary Howard Lutnick and White House trade adviser Peter Navarro — appeared on television with conflicting messages about the president’s trade agenda. Shortly after Lutnick went on Bloomberg TV to hint at the auto carve-outs that would come later in the day in a bid to soothe markets, Navarro was on CNN downplaying the market reactions to the trade war.
“We’ve had two days of volatility in the markets, and everybody’s hair is on fire,” Navarro said.
Their split underscores broader divisions within the White House on trade, with one camp advocating a pure protectionist stance focused on boosting domestic industry and the other more reactive to markets and impacts on consumers and businesses reliant on global markets and supply chains.
Lutnick found himself aligned with Treasury Secretary Scott Bessent and National Economic Council Director Kevin Hassett to try to walk the tariffs on Canada and Mexico back, the person close to the administration said.
“If you put a gun to his head, Lutnick’s on the no-tariff side, believe it or not,” the person said.
At the same time, Trump has been an inconsistent messenger on tariffs, often conflating this current push the administration says is related to fentanyl deaths with a broader frustration that, he believes, other countries are taking advantage of the U.S. economically. On Tuesday night, the president again insisted that by failing to levy tariffs the U.S. is in essence paying “subsidies” to Canada and Mexico.
“And the United States will not be doing that any longer. We’re not going to do it any longer,” he said.
At least at this point, the president also seems unconcerned about alienating some of the people who worked to elect him, including the farmers in middle America who have been outraged by the tariff announcements. It’s unclear whether farmers will get an exemption from this latest set of duties for things like potash, a key ingredient in fertilizer primarily sourced from Canada — let alone any future tariffs. The ag industry is also one of the first to face retaliation from foreign countries in response to higher U.S. tariffs.
“President Trump is president because of rural America. And so I don’t know why you’d want to do anything to make things more difficult and things are very, very difficult on farmers right now,” said Sen. John Boozman (R-Ark.).
Amid the chaos, the president’s allies on Capitol Hill are reacclimating themselves to a mantra they clung to during his first administration: Expect the unexpected.
“The strategy — how should I put this — I think the strategy here is devised by him and him alone,” said Sen. Josh Hawley (R-Mo.), before the afternoon auto announcement. “Which is typically how it is.”
Doug Palmer contributed to this report.
